Alliance and Leicester - Discrimination

Victim_1

Hi there, feedback would be good.

I am sure there are many of you out there that purchased a fixed rate mortgage around 3 years ago and got a fixed rate deal with a 95% LTV.

I did, fixed interest rate of 4.99 at the time, 2 years later and fixed rate ends and they are not interested in even moving me to one of their other products with cheaper interest rate? Apparently my LTV is now 122% - which is actually nonsense - but they work this out by looking at the average house price in your area dividing it by 2 and then subtratcing a random number that comes to them ;-)

Hmmm.... so as a customer with them paying interest only and never missing a payment - they would rather not offer me a better product as I have a high LTV - so rather than help the customer and allow them to pay off their mortgage and get the LTV down - they leave you on the high SVR as this is much more beneficial to the customer allowing them to be in a less stable financial position to pay off what they deem as a high risk - therefore actually making the customer an even higher risk. Now I am not about to default on payments - but it enrages me that I am discriminated against and not given as good a deal as another customer. I have now stuck with them for over 1 yr on SVR and I am getting very upset as a customer and I am wanting to take further action in writing to them.

Has anyone else had any joy with this - or even know of a template to use to contact the Alliance and Leicester with?

Your feedback will be very much appreciated.

(PS - I hope you got my sarcasm throughout this post ;-))

beecher2

I don't see how you're being discrimated against - your lender is under absolutely no obligation to offer you a deal. You bought pretty much at the peak with hardly any deposit and will not now have the LTV needed to get a new deal anywhere. No bank will lend to you at the moment so rather than wasting time playing the victim, you need a plan of action. If you have evidence that your LTV is actually less than 90% then go elsewhere.

Conrad

From a lenders point of view they need to consider the following;

1) The money markets and the lenders investors need a certain return from a certain risk - they cannot mix n match and make special deals for each individual - it would massively put up thier funding costs and mean all borrowers had to pay more

2) Insurance - giving you such a rate with a high loan to value would be unisurable, so the lender would be breaking all sorts of covenants and be in breach of thier own insurers terms

3) You are a high risk borrower in terms of loan to value, and the rate must reflect this

4) You cannot superimpose youre personal objectives and expectations onto the above rules and imperatives just because you as a one off random individual thinks it would be better for you


Now imagine you lend me £10,000 on a boat. You charge me 5% interest fixed 3 years.

The boat was worth £12000 when the deal was made.

3 years later the boats value has reduced to £8000 (although the owner claims thhis is not the case - but you have to be guided by the generality).

Now I ask you for another 5% return, even though you have less security if I stop paying (say I become ill / go mad / become an achoholic / loose my job).
You as an investor have plenty of people with more equity that WILL pay you 5% rate, so you wont want to give me those terms - you just wont. Your own needs will be paramount. Indeed you want max return in case the loan goes into arrears - that way if you repossess and sell for £7000 (not £8k because in my bitterness I've wrecked the boat - as people do thier homes), at least you'd had some higher interest payments for a while.

I imagien you will still argue that having a lower rate puts the lender in a safer position, but Im afraid thats not the case.

Thrugelmir

So what steps have you taken to start repaying the capital balance owed?

brit1234

Your a sub prime borrower and represent a higher risk to the lender.

You need to pay off the mortgage to get a better deal.

Its not discrimination its sound business to protect themselves.

opinions4u

Victim_1 wrote: »

Hmmm.... so as a customer with them paying interest only and never missing a payment - they would rather not offer me a better product as I have a high LTV - so rather than help the customer and allow them to pay off their mortgage and get the LTV down

The reality is that the overwhelming majority of customers on a lower rate do NOT overpay so would not get their LTV down.

You are a high risk customer not making any repayment of capital each month. Don't expect them to throw money at you.

- they leave you on the high SVR as this is much more beneficial to the customer allowing them to be in a less stable financial position to pay off what they deem as a high risk - therefore actually making the customer an even higher risk.

1) I doubt they offer any deals to existing customers that are significantly cheaper then their 4.99% SVR.

2) It is a centuries old practice to charge higher risk customers more interest and makes absolute fiscal sense.

Now I am not about to default on payments - but it enrages me that I am discriminated against and not given as good a deal as another customer.

Give over. They promised you their SVR and they gave you their SVR. What else did they guarantee you and when? What other negative equity customers are they offering deals to while they discriminate against you?

I have now stuck with them for over 1 yr on SVR and I am getting very upset as a customer and I am wanting to take further action in writing to them.

Not worth the stamp, to be honest.

Out of interest, what was their SVR 3 years ago? I bet your rate and payments now are lower than you expected them to be at the time you took the mortgage out.

furbi

I have A&L mortgage for last 3 years too - fixed rate deal ended over a year ago. When I purchased my house I had £70 equity. I don't know about you but I went to a financial advisor at the time who encouraged me to go for the interest only deal, borrowing almost the maximum my income would allow. There was never any discussion of paying off the capital balance. A&L didn't even want to know how I intended to do this/for proof that I was taking out a separate financial product. I only ever intended to keep the house on for a year in the hope that the property market would stabalise, allowing me to search for a cheaper place - I'd bought out an ex - at the time prices were rising so quickly I felt it made sense to wait it out for a while. The financial advisor agreed. She told me to come back when the fix ended and she'd sort out another fix. She's vanished now.

Roll on 3 years and my situation has changed. I'm stuck in a house I hate, I have a child and a new partner but the house in £30K in negative equity - it has halved in value. I'd love to get a suitable family home with my partner but can't see it happening over the next 5+years. I can't ask him to pay half as its not his debt.

The bank are laughing, there is no comeback for their irresponsible lending and they can charge the 4.99% while other banks charge far less - so I can't try to pay off the negative equity. They must be making big profits off people like me who are stuck. If I could sell and cut my losses I would. I'd be very happy not to be a high risk borrower. When the interest rate goes up, I dont know how I can pay. A&L were fully aware of my income and that there was no way I could afford to pay off the capital. They chose to lend to me. I am worrying myself sick about the future. They're reaping the profits.

It's all very well people telling you that its your own fault but lets face it, its how the market was back then. You were encouraged to stretch yourself. The mortgages were cheaper than renting. It made sense. People forget there is a big human cost to this.

_Andy_

...so of course absolutely none of that was your choice was it?
I assume they held a gun to your head and forced you to do it.

opinions4u

furbi wrote: »

I have A&L mortgage for last 3 years too - fixed rate deal ended over a year ago. When I purchased my house I had £70 equity. I don't know about you but I went to a financial advisor at the time who encouraged me to go for the interest only deal, borrowing almost the maximum my income would allow. There was never any discussion of paying off the capital balance.

I wasn't present for the conversation you had with your adviser. But did it not, just for a moment, cross your mind that you were never going to repay the debt?

A&L didn't even want to know how I intended to do this/for proof that I was taking out a separate financial product. I only ever intended to keep the house on for a year in the hope that the property market would stabalise, allowing me to search for a cheaper place - I'd bought out an ex - at the time prices were rising so quickly I felt it made sense to wait it out for a while.

You assumed house prices could only go up. History says otherwise.

The financial advisor agreed. She told me to come back when the fix ended and she'd sort out another fix. She's vanished now.

She's probably an unemployed victim of the Credit Crunch.

Roll on 3 years and my situation has changed. I'm stuck in a house I hate, I have a child and a new partner but the house in £30K in negative equity - it has halved in value. I'd love to get a suitable family home with my partner but can't see it happening over the next 5+years. I can't ask him to pay half as its not his debt.

So you have a partner, but not a financial partnership.

The bank are laughing

Believe me, the bank are not lauughing. Alliance & Leicester would have gone bust if they hadn't been bought out. They have written off £millions in bad debt. There will be no laughing about your situation and no laughing about their position either.

there is no comeback for their irresponsible lending and they can charge the 4.99% while other banks charge far less

Many banks tied in to lower rates are losing money on those loans because it costs them more to raise the money than they lend it at.

so I can't try to pay off the negative equity.

Why not? What was the SVR when you signed up? Higher than 4.99%, that's for sure. What's stopping you overpaying by an amount between the SVR 3 years ago and the SVR now?

They must be making big profits off people like me who are stuck.

I wouldn't count on it.

If I could sell and cut my losses I would. I'd be very happy not to be a high risk borrower. When the interest rate goes up, I dont know how I can pay. A&L were fully aware of my income and that there was no way I could afford to pay off the capital. They chose to lend to me. I am worrying myself sick about the future. They're reaping the profits.

The bolded phrase says it all. I'll bold another one:

YOU CHOSE TO BORROW FROM THEM

beecher2

furbi wrote: »

It's all very well people telling you that its your own fault but lets face it, its how the market was back then. You were encouraged to stretch yourself. The mortgages were cheaper than renting. It made sense. .

Some of us had more sense than to stretch ourselves, regardless of what credit was being offered to us. Your assumption that the bubble would never burst made no sense whatsoever, even at the time. You've made a bad decision, and I think it is better to face up to that than to blame others.

Victim_1

Conrad Thank you very much for your feedback it was very much appreciated and easy to understand.

Also Furbi i feel your pain.

However all the other wasted posts which seem to be more poking fun at other financial situations - you are only wasting your own time.

This post was to help get some feedback about what my options are - not for someone else to state the obvious - so seriously stop wasting your time replying and actually try and help someone on this forum if you can - as I am sure Martin would not approach someone financial situation in the way which some of you have and therefore you are breaking what he meant for this forum and site to be for users.